Russia’s Hotel Projects and Investments Sven Osmers Head of KPMG’s Real Estate practice Russia &...
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Transcript of Russia’s Hotel Projects and Investments Sven Osmers Head of KPMG’s Real Estate practice Russia &...
Russia’s Hotel Projects and Investments
Sven Osmers
Head of KPMG’s Real Estate practice Russia & CIS
April 10, 2014
2© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Сontent
Overview of existing hotel supply and pipeline projects in Russia
Overview of major hotel brands activity in the Russian market
Hotel investments in Russia
Overview of existing hotelsupply and pipeline projects in Russia
4© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
55 000
60 000
2875
56500
Room inventory beginning of the year Room inventory yearly increase
Branded Hotel Rooms stock in Russia (2001 – 2018)
Source: KPMG analysis
20 TIMES IN
CREASE
5© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Branded hotels in major cities
Source: KPMG analysis
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0 5,000 10,000 15,000 20,000 25,000
Future room inventory
10,83421,845
Existing room inventoryFuture room inventory
Po
pu
lati
on
, th
ou
san
d
6,911
St. Petersburg
8,861 (28% )
11,06921,845 ( 97% )
Moscow
12,828
3,0425,056 (66% )
Sochi 4,168
Regions
6© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Major regional Hotel markets
Source: KPMG analysis
606
345
Rostov-on-Don
1,336
Irkutsk
208486
Kaliningrad705
Kazan
1,310
Lipetsk581
Omsk
168523
Samara918
Belgorod
155 527
Krasnodar
163 1,022
Nizhniy Novgorod
2201,168
Tyumen495
Voronezh
815
Ekaterinburg1,342
200
400
600
800
1,000
1,200
1,400
1,600
0 200 400 600 800 1,000 1,200 1,400
Kaluga
140
578
1,142
Novosibirsk
188763
Pop
ulat
ion,
thou
sand
Future room inventory
1,310606
Existing room inventoryFuture room inventory
Overview of major hotel brands activity in the Russian market
8© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Projection of Branded Hotels
Rezidor
Marriott
Hilton
Sokos
Wyndham
Lotte
Fairmont Raffles
Four Seasons
Other
- 2,000 4,000 6,000 8,000 10,000 12,000 14,000
Existing Future
Rooms inventory leader by 2018
CARLSON REZIDOR HOTEL GROUP
Hotel network leader by 2018
ACCOR
Rooms
Accor
Rezidor
Hilton
InterContinental
Marriott
Starwood
Hyatt
Wyndham
Kempinski
Golden Tulip
Lotte
Sokos
Rocco Forte
Vienna Intl
Other
- 10 20 30 40 50 60 70
Existing Future
Hotels
Source: KPMG analysis
9© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Luxury; 31.0%
Upscale; 35.3%
Mid-scale; 33.7%
Segmentation: Top performers Vs. Russian regions
Moscow, St.-Petersburg, Sochi
33%
35%
32%
Luxury; 25.8%
Upscale; 28.7%
Mid-scale; 45.6%
Russian regions
22%
25%
53%
Source: KPMG analysis Q1 2014By 2018
10© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Investing in branded hotels: factors to consider
■ New development/ reconstruction
■ Optimal room inventory (from 120 up to 300 rooms)
■ Average room size (mid-scale hotel: 22-28 m²)
■ Gross build area per room (mid-scale hotel: 40-67 m²)
CONCEPT
LOCATION
■ Population of the city more than
300 000 people.
■ Cities (regions) with existing properties under same brand
(specifically recreational properties)
■ Location that makes business sense for
the Hotel property
■ Visibility & accessibility
Hotel investments in Russia
12© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Decision
To brand or not to brand?
Efficient business processes
BRANDED
Easier access to financing and easier exit
ADR and Occupancy increase due to brand recognition
Operational risks decrease
More control over operations
INDEPENDENT
Less CAPEX
Lower marketing and reservation costs
Flexibility in pricing and positioning
THOROUGH FEASIBILITY ANALYSIS
13© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Level of influence on efficiency of the hotel project
Summarised expenses
Influence on the project efficiency
■ HBU
■ Market analysis
■ Concept development
■ ROI analysis
■ State permits■ Design
■ Shell and core construction
■ FF&E ■ Staff recruiting
■ Training
■ Set up of business processes
■ Start of sales & marketing activities
■ Hotel management decision
FEASIBILITY ANALYSIS
PROJECT DOCUMENTATION CONSTRUCTION
PREOPENING AND COMMISSIONING
Source: KPMG analysis
14© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Drivers for hotel development in Russia
Number of Keys
FIFA World Cup 2018:
19,000 Hotel Rooms
Industries Development:
Automotive cluster in Kaluga
Sochi Olympics 2014:
12,000 Hotel Rooms
Destination marketing:
Major goal a/p Federal program
Infrastructure development: Special Touristic Economic Zones
15© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Hotel projects financing sources
Financing sources
Debt financing Co-investment
Strategic funds Portfolio fundsGovernmental
banksPrivate banks
30-40%D/V
Rarely used
Majority of hotel projects
Mainlyrefinance
Very few exist
In Russia
Source: KPMG analysis
16© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Debt financing: what banks look at?
Feasibility
study/
Business
plan
Agreement
with reputable
operator
(interna-
tional/
domestic)
Prior experience
Legal due diligence/ state permits/ project
documentation
17© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
How we can help
■ Feasibility analysis and Valuation
■ Market analysis
■ HBU analysis of land plots
■ Concept development
■ Assistance in the raising of finance and investment planning
■ Operator selection and negotiating operating agreements
■ Analysis of Hotel operations and performance, recommendations to optimise performance
Advisory services provided by KPMG for the hospitality and leisure industry
Thank you
Sven OsmersDirectorHead of Real Estate Russia & CIS KPMG
Tel: +7 (495) 937 4477Fax: + 7(495) 937 4400 E-mail: [email protected]
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2014 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.